S&P 500 Drops as Market Slide Extends to Third Session
Here come the dip buyers.
The S&P 500 cut its Thursday decline to 0.4% as the morning rolled on. The Dow was down 43 points, or 0.1%, after trading down more than 200 points. The Nasdaq Composite was down 0.5%.
The market’s three-day skid followed indicators including the S&P 500’s 14-day relative strength index that suggested the market was in “overbought territory” for the fourth time since its April lows.
Frank Cappelleri, founder of technical analysis firm CappThesis, told Barron’s the prior three times led to a pullback with minimal drawdowns.
“That being said, while there’s no sign this time is different, we also have to be careful not to get too complacent, since at some point a bigger decline will be in the cards,” he said. “We’ll get a better idea when—and if—the next dip is bought. More importantly, we’ll need to see how far the market bounces from that point. Buyers have been repeatedly and instantly rewarded with new highs soon after buying prior dips.”
That makes this morning’s rebound worth keeping tabs on.